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The only engine available for the ZZW30 was the all-aluminium 1ZZ-FED, a 1794 cc inline-four. Like its predecessors, the engine used dual overhead camshafts and 16 valves. The intake camshaft timing was adjustable via the VVT-i system, which was introduced earlier on the 1998 MR2 in some markets. Unlike its predecessors, however, the engine was placed onto the car the other way round, with the exhaust manifold towards the rear of the car instead of towards the front. The 138 hp (104 kW) maximum power was quite a drop from the previous generation, but thanks to the lightness of the car it could still move quite quickly, accelerating from 0 to 100 km/h (62 mph) in 6.8 to 8.7 s depending on the transmission option, the Sequential Manual being unable to launch and shift as quickly as the clutch operated manual. Curb weight was 2,195 pounds (996 kg) for manual transmission models.

In addition to the 5-speed manual transmission, a 6-speed manual or 5-speed Sequential Manual Transmission (SMT) was also available starting in 2002. SMT is standard feature in Australian market; however, air conditioning was optional. After 2003, a 6-speed SMT was an option. The SMT had no conventional H-pattern shift lever or clutch pedal. The driver could shift gears by tapping the shift lever forward or backward or by pressing steering-wheel mounted buttons. Clutch engagement is automatic, and the car will automatically shift to second and then first gear when stopping. Cruise control was never offered with the manual transmission, but was standard for SMT cars.